Aviation in India-What lies ahead!!

Since the past few months the front page of the orange newspaper ( read Economic Times) has been carrying headlines on the aviation sector.  Be it Kingfisher's king-sized problems or Air India, the national carrier, problems akin to the stature of the Maharaja.  But this has raised quite a few doubts on the Indian Aviation sector as a whole. India is the second fastest growing economy in the world boasting of a population of 1.20 billion but only 50 million prefer this luxurious n fastest mode of transport. And there are reasons aplenty.
To start with, aviation was started in India by the visionary, J.R.D.Tata who himself was a pilot, under the name Tata Airways.  Incidentally he flew the first flight as well from Karachi to Mumbai.  The airlines was given to the nation as a gift by the large hearted tatas or in government's words it was nationalized.  And from there the airlines problems have grown each day.  The domestic routes were covered under the Indian Airlines brand while international routes were served by Air India.  The government flagship enjoyed exclusive dominance in the Indian skies till the 90's until the aviation sector was opened up.  This saw a rush of airlines like Jet Airways, East-West, Damania and so on out of which only Jet Airways has survived and grown to become the largest carrier in India.
Come 2001 and an air force officer, Captain G.R.Gopinath who dreamt of making the Indian skies affordable to the common man of India.  He introduced Re.1 special fares and the lottery system which made flying affordable and attractive.  But as they say finance is very important in a business which I completely agree and Gopinath made the mistake of growing without caring for the profits.  So it accumulated huge debts and finally had to be sold to the ever-so charismatic Dr. Vijay Mallya of Kingfisher fame.  Even though the Chief Financial Officer warned against such an acquisition, Mallya was adamant to grow his Kingfisher brand ( the beer is what I'm talking) through the aviation sector by modernising the airline and bringing the oomph factor to it .  And the result is that Kingfisher has never posted profits since its inception and is now saddled with debt of over 7000 crores which is a huge amount but is dwarfed by the Air India case discussed further.  None of the banks are ready to lend more to the king of good times and he has been forced to pledge his stake in flagship companies like United Breweries which is a cash cow for him and has also decided to sell his non core companies.
So what are the options left with Kingfisher? Not much would be my answer as soaring crude prices and the high taxes levied on Aviation Turbine Fuel (ATF) by the government have left no room for cost cutting.  Vijay Mallya can either sell the airline to a big corporate house like the Reliance who are eager to get into this business and have more the 70000 crore of free cash.  Another option is to trim the airlines' operation by cutting down on non-profitable routes and on a lighter note less clothes to the air-hostesses( no offence intended and I have the highest respect for females) and sell all the assets that the airline has in the form of land banks and guarantees.  Though this will hurt Mallya's image as a flamboyant businessman he will atleast be out of this mess and will be able to concentrate on his love, alcohol.
Now comes the case of Air India.  Though the airline continued to make profits till around early 2000s, the tenure of Mr. Praful Patel who used the airline as his family business and ruined the business.  The first decision was the untimely merger of Air India and Indian Airlines with a view to rationalise the operations.  But it backfired miserably as the merger is still pending in terms of codes shared and this has created problems in the new Air India.  The total number of employees are more than 70000 and the average number of employees is around 150 which is quite high as per industry standards.  Coupled that with around 40000 crore of debt is a serious problem for the airline.  Even though the new aviation minister has announced a 30000 crore package to be infused in the airline by 2020 in stages, it is like throwing good public money behind bad money.
But the case of Air India turnaround is somewhat simpler as compared to Kingfisher Airlines.  The airline has the backing of the Government and hence funds are not an issue.  Taking this as an advantage it should offer a voluntary retirement scheme (VRS) for its employees and those ready to opt for it must be compensated with a large heart just like Ajay Piramal who chose to share the wealth with all concerned when he sold his formulations business and pocketed a huge sum.  This will phase out the old and less efficient staff and will increase the operational efficiency.  Another advantage that Air India has is the huge tracts of land which are in some valuations valued at 30000 crore.  This itself wipes out most of the debt.  Yet another source of income could be partial stake sale in the Maintenance , Repair and Overhaul ( MRO) division of the airline which is among the best in the world.  After this the airline would only have the operations as the primary function and could lead to better utilization of resources.
The only successful carrier in India today is Indigo Airways but that airline too has been witnessing delays which is not going down well with the customers.  Other players in this industry are Spicejet and Go Air which are smaller players and have managed resources efficiently.
Thus the Indian aviation sector will witness growth if the troubled carriers find a pragmatic solution to their problems else the whole sector will suffer as these are too big to die.  Also the government must relax rules in the sector and allow foreign carriers to invest directly and also help the industry with pro- industry policies at least till the sector is out of this mess.

the world of telecommunications simplified..

World Telecommunication Day is celebrated on the 17th of May every year.  But this year it was completely forgotten, at least in India, and on the social networking site.  Being a telecom enthusiast I was not pleased to not see a single mention of this.  And this compelled me to blog (its been exactly 2 months since my last blog) about my passion and my first love.
Telecommunication can be divided into various categories: services using airwaves provided by the telecom companies, cell phones and the passive infrastructure comprising telecom towers, fiber optic or copper cables and to some extent satellites.I would briefly describe cell phones and passive infrastructure and a detailed explanation of the first part since that part has been one of my favourites since childhood.
To start with, cell phones have come a long way from the cordless type phones which would easily injure a person even if hit by mistake to the sleek and sexy phones being launched at the speed of light these days.  Once Nokia ruled this market but has now passed on the lead to Samsung which has a phone in each and every segment you ask for ( phones start from 999 to Rs. 44000 for the latest samsung galaxy s3).  The original Nokia and Motorola phones gave importance to call clarity, strength and superior battery life while the latest phones like the iPhone and galaxies of the world package everything in the 4 odd inch screen phone but come with the disadvantage of a poor battery life.
The passive infrastructure includes telecom towers or in technical terms as one of my favorite teachers, Ms.Geeta Hayagreev, would say the base switching center and the base transceiver system which in layman's language means the device which takes care of your call and data routing over the network.  Very few companies like Bharti Airtel and Reliance Communications have completely owned tower companies while the others just hire the services of towers owned by dedicated tower companies.  Some notable names are American Tower Company and GTL Infrastructure. Passive Infrastructure would also include the fiber optics which are the latest means of communication and are found to be quite effective.  Vodafone and Reliance Communication have an extensive network of these cables which virtually connect the whole world.
Now comes the network part.  I would first go into the network which supports our calls and data.  Technically speaking ( the only thing I've learnt in Electronics and Telecommunication Engineering) frequency spectrum is used in the 800MHz( mainly used for CDMA services), 900MHz ( used by old GSM operators like Airtel and Vodafone), 1800 MHz (used by new GSM players like RCOMM) and the 2.1GHz (used for 3G services providing higher data rates and better voice quality).  Other frequency bands which are used are 850MHz and 1900MHz which are used in the USA.  CDMA(Code Division Multiple Access) services was developed by Qualcomm of USA and is used by companies such as AT&T and Reliance Communications.  It makes use of the entire spectrum available and hence it is considered more efficient in terms of usage.  The rival technology which is widely used today is the GSM (Global Systems for Mobile Communications)  was developed in Europe and basically divides the frequency available in either time slots or smaller frequency bands.  That was a brief description of the technical aspect of the mobile communications.
 Since I don't have a very good idea about the telecom sector of countries other than India, I will stick to the Indian Telecom Story.  Cellular phone service started way back in 1996 when the longest serving chief minister of India, Mr. Jyoti Basu made the first phone call on a Modi-Telstra network for some 16 odd rupees.  Modi network Back then even incoming calls were charged and it was only the elite people who owned a cell phone, my dad being one of them and that's how it became my passion and first love.  From 16 rupees in the late 90's to just a rupee and free incoming in 2001 thanks to Dhirubhai Ambani's vision that in order to be a successful telecom company you don't have to compete with rival companies but with the post card and hence it should be affordable.  And then there was no looking back.  Call rates have fallen to drastically low levels of just 30p/min with free incoming calls while my best friends Akshay and Nirjar still pay for incoming in the USA where the first mobile phone was manufactured by Motorola.  Even though there has been hue and cry over corruption in the telecom sector where spectrum was given at lower prices by A.Raja , I believe this very fact allowed 14 players in India and reduced cost rates to extremely low levels though it could have been handled in a better way.  But as of today Indians have the privilege of good services at cheapest rates in the world.
As I write this, there has been uncertainty from the government over the future of this industry and even though third generation services haven't had the success as the operators expected ( only 12million subscribers use 3G out of an estimated 680 million subscribers) India has already embraced 4G technology with Airtel launching services in Kolkata and Bangalore.  It remains to be seen whether companies can profitably roll out 4G services in a price sensitive country like ours where operators have had to cut 3G services by upto 70% to attract more customers and recover the heavy price paid for the airwaves and missed calls are still a trend. Whatever the scene is, the customers stand to benefit from this and have access to all the three technologies (second, third and fourth generation services) at the same time.